Russian IT companies consider that the country is approaching a new investment and replacement cycle. In 2018-2019 a visible increase of the demand for IT products and services is expected.

According to the latest PMR report “IT market in Russia 2017. Market analysis and development forecasts for 2017-2022” the total sales of IT products and services in Russia increased by 4.4% y-o-y to RUB 696.6bn (€9.41bn) in 2016. In terms of euro, last year the contraction of market value was 5.0% y-o-y. The valuation done in euro better characterises market performance. The hardware and significant part of software solutions are imported to Russia and their prices almost directly depend on the exchange rate. Also in 2015 and 2016 those vendors which quote their prices in rouble were adjusting them to new exchange rates and this caused an increase in the nominal market value. At the same time, last year the contraction of the market was not as sharp as in 2014 and 2015 when annual decline in euro reached respectively 16.1% and 30.8%. The sales of some IT solutions stabilised in 2016 whereas some segments of the market even showed the recovery of the demand.

At the beginning of 2017, the Russian government took several decisions which confirmed the commitment of country’s authorities to continue IT investments in the next years. In particular this is the programme for digitalisation of Russian economy and new edition of the Strategy for development of information society. The government’s policy also facilitates an interest to new technologies and private business in the country as well as state-owned organisations and corporations actively discuss digitalisation strategies and develop the plans in this area.

Substitution of imported software and even hardware is the factor which may cause significant structural changes on the market in the next three to five years. This policy of Russian government will also push the prices of IT products and services down. Priority given to local vendors is expected to help many companies to develop their products and services working as “market incubator”. Having functionality comparable to those of the solutions of many global vendors, Russian companies will enter the market of private users with more attractive prices and global suppliers will need to react.

There are already now competitive local software solutions available in the country and we expect their number to increase. We consider that global vendors will be pushed to the segment of highly performing and functional products leaving significant part of mass market to local rivals.

In 2018-2019 we expect to see healthy demand for cloud computing solutions, datacentre services and IT security software and services in the country although these segments are not really big to pull the development of the entire market substantially.

On a longer term, Russian IT companies expect new technologies including IoT, big data, block chain technologies, 3D printing, corporate mobility and cloud computing to become new triggers for IT market growth in addition to the replacement and upgrade of traditional IT systems.

It is also generally considered that more competitive environment on the market will push large companies to focus on optimisation delegating many support services from in-house teams to external providers.